Surescripts loses motion to dismiss FTC antitrust case

By | January 24, 2020

Dive Brief:

  • A federal judge has rejected Surescripts’ motion to dismiss an antitrust lawsuit from the Federal Trade Commission, a blow to the e-prescribing giant as the curtains rise on what’s likely to be a drawn-out legal fray.
  • In April, the FTC sued Arlington, Virginia-based Surescripts over alleged illegal action to maintain its e-prescribing monopoly in multiple markets, including the use of exclusivity agreements. Surescripts countered that the court doesn’t have jurisdiction and the FTC doesn’t have significant evidence to sustain the case.
  • U.S. District Court Judge John Bates disagreed, dismissing Surescripts’ argument Friday. CEO Tom Skelton said the company would continue to fight the case in a statement to Healthcare Dive.

Dive Insight:

The health IT player argued the FTC’s suit is procedurally defective, but the federal judge sided with the consumer protection bureau Friday in overturning Surescripts‘ motion to dismiss.

“Further factual development may vindicate Surescripts’s position, but the FTC’s complaint contains sufficient facts to move beyond the pleadings stage,” Bates, a George W. Bush appointee in the U.S. District Court for the District of Columbia, wrote.

Skelton said the company would not back down.

“We stand firm in our commitment to contest the FTC’s allegations on the facts and merits of the case,” Skelton said. “Specifically, their complaint makes significant factual errors about Surescripts’ business and mischaracterizes the e-prescribing market.”

The FTC alleges Surescripts, owned by Express Scripts, CVS Health, and two major pharmacy trade groups, used loyalty contracts and threats to stop customers from switching or adding other e-prescribing platforms to maintain a 95% share in two e-prescribing markets, routing orders from providers to pharmacies and determining patient eligibility for drugs, for a decade.

Surescripts, which processed almost 18 billion transactions in 2018 and has an estimated annual revenue of $ 47.5 million, removed the loyalty provisions in its contracts as a result. But that didn’t get the FTC to drop its complaint that Surescripts enacted a cutthroat corporate strategy to freeze out potential competitors stretching back to the early 2000s, resulting in higher prices, reduced quality and stifled innovation, according to the agency.

In two cases, the company nabbed a noncompete promise from startup RelayHealth in 2003, then expanded the agreement in contract renewals in 2010 and 2015. EHR vendor Allscripts was put under stringent requirements to ensure its business, threatening to revoke Allscripts’ access to the thousands of PBMs and pharmacies connected to Surescripts — its network includes virtually all PBMs, pharmacies and clinicians in the country.

Nineteen-year-old Surescripts is no stranger to controversy. In September, the company terminated a contract with data startup ReMy Health, citing fraudulent behavior. Analysts speculated the move was to hamper Amazon’s PillPack, a direct competitor of Surescripts’ parent companies, from entering into the prescription drug delivery market, as PillPack contracted with ReMy.

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